From 30 November 2019 savers will no longer be able to make new applications for the Help-to-Buy ISA.
The short-lived ISA has helped many people on to the property ladder but after this date, no new applications can be made, while existing account holders will only have until December 2030 to claim the 25 per cent bonus on their savings.
Although this ISA product is disappearing from the market, its replacement is already here in the form of the Lifetime ISA (LISA).
The LISA offers a similar top-up of 25 per cent of a person’s savings when it is used to buy a home, but as you can deposit a greater amount over a longer timeframe there is the potential to build up a far larger deposit.
However, unlike the Help-to-Buy ISA, the bonus is not paid on completion of the property sale, but rather at the end of the tax year in which the money is withdrawn for sale, which may mean that the bonus can contribute directly to the deposit amount.
Unfortunately, the LISA is currently only offered by 13 providers – far fewer than the Help-to-Buy ISA – and therefore take-up has been far slower.
Experts suspect that this may be because of the limitations of the LISA, which only allows savers to benefit from the bonus if it is used when they purchase their first home or if they withdraw the funds when they are aged 60 or older.
The LISA also has a £450,000 price cap on the purchase of a home, which means that it is often not suitable for buyers in London and the South East.